The Brief | July 23, 2024

The Brief: Reclaiming tech’s pro-innovation, pro-social narrative

ImpactAlpha
The team at

ImpactAlpha

Greetings Agents of Impact!

In today’s Brief:

  • The politics of tech and innovation 
  • EV adoption in Pakistan
  • Catalytic credit for recycling 
  • Launching careers with artificial intelligence

Politics is a proxy battle for the soul of tech, innovation and social impact. The tech titans’ swing to the right is so last week. This week, the suddenly reset presidential race has given voice to a different cast of investors and entrepreneurs who are just as resolutely pro-climate, pro-diversity, and even pro-immigration. They are pushing back against the likes of Elon Musk, Marc Andreessen, David Sacks and Chamath Palihapitiya, who last week lined up behind former President Donald Trump. (“A classic VC move to buy into the top of a hype cycle,” quipped Shomik Dutta of Overture Climate VC.) The overheated presidential campaign has become an arena for a broader competition of ideas about the purpose of innovation and investment itself, and the policies that best nurture it toward scalable solutions to urgent challenges. At stake in that competition are trends in venture capital and private equity broadly, and impact investing specifically, as institutional investors and the fund managers that cater to them line up behind federal policies and leadership on climate, crypto and global engagement. 

  • Shifting tide. Just as the nomination of Ohio Senator JD Vance, a former venture capitalist, created a permission structure for “tech bros” to back Trump, the sudden elevation of Vice President Kamala Harris to almost-presumptive Democratic nominee unleashed a flurry of proclamations that tech might have more to gain from a progressive agenda. “The tide is shifting,” Aaron Levie of the cloud software company Box wrote on X. Democrats, he said, “could be the party that is wildly pro tech, trade, entrepreneurship, immigration, AI and science, if it so chooses.” Reid Hoffman, the billionaire founder of LinkedIn, explicitly endorsed Harris and called Democrats “the party of policy, progress and action.” Silicon Valley venture capitalist Ron Conway said Harris had long been “an advocate for the tech ecosystem.”
  • Pushback. Last week’s pro-Trump announcement by A16Z’s Andreessen and Ben Horowitz, both longtime Democratic supporters, sent shockwaves through Silicon Valley. The duo’s about-face boiled down to three narrow issues: AI, crypto and preventing the so-called “billionaire’s tax” on unrealized capital gains. They explicitly ignored other vital issues. Rob Day of Boston-based climate tech investor Spring Lane Capital, took umbrage at the self-interest. “We, who actually support important innovation on the ground, dissent,” he tweeted. Seth Bannon of deep tech startup Fifty Years called out immigration as key to tech innovation. “Wild to see ‘pro startup’ folks endorse the most anti-immigration president in modern times,” he tweeted. Venture capitalist Vinod Khosla rebuffed Musk in a direct exchange. “Hard for me to support someone with no values, [who] lies, cheats, rapes, demeans women, hates immigrants like me.”
  • High stakes. For all of Trump’s talk about “America First,” it has been the Biden administration that has sparked a historic reshoring of industry and jobs in key growth sectors such as EVs, chips and renewable energy. The jitters of the past few weeks over the fate of elements of Biden’s climate agenda were gradually swinging back to cautious optimism. The Greenhouse Gas Reduction Fund is set to catalyze a nationwide green lending network that can reach deep into underserved communities. “We have this opportunity, a second bite at the apple, for a transformative green infrastructure program for our country,” BlocPower’s Donnel Baird said at a conference in Washington, DC, yesterday. 

Dealflow: EV Adoption

Zyp Technologies raises $1.5 million to support electric two-wheeler adoption in Pakistan. As in India and elsewhere in Asia, two- and three-wheelers dominate the roadways of Pakistan. The country of 235 million people has 27 million registered two-wheelers and a million registered three-wheelers. Zyp Technologies, a Lahore-based maker of electric two-wheelers, also runs a network of battery swapping stations for its bikes’ users. The company raised $1.5 million in early-stage funding from Shorooq Partners and Indus Valley Capital to get 1,000 of its e-motorbikes and 60 charging stations onto Pakistan’s roadways within the next 12 months. Zyp’s manufacturing facility can produce 12,000 bikes per year. Its early sales strategy focuses on larger customers that buy in bulk, such as medical diagnostics company Chughtai Lab and courier company TCS.

  • EV incentives. Pakistan’s government wants half of its smaller vehicles to be electric by 2030. Legislation providing tax incentives for EV imports and EV-component imports has been in place since 2019, though the current pace of adoption will make it difficult to reach the 2030 target. Other EV startups in the country include e-motorcycle makers Evee and Metro Electric Bikes, battery manufacturer Atlas Battery, and e-bike sharing service ezBike.
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Closed Loop Partners provides ‘catalytic credit’ for recycling services in Minneapolis. Eureka Recycling has been collecting and recycling waste from Twin Cities residents for more than two decades. The nonprofit secured $10 million from Closed Loop Partners to upgrade its recycling facilities and ramp up capacity from its current 100,000 tons a year for materials including glass bottles, sheet paper and metal cans. The New York-based circular economy investor invested via its private credit arm, Closed Loop Infrastructure Group, which provides flexible or below-market rate loans for recycling infrastructure in the US.

  • Industry partners. Closed Loop Partners launched in 2014 with capital from strategic investors including Pepsi and Walmart to invest in circular economy companies and infrastructure. It has invested more than $500 million in 80 companies. Its portfolio companies and projects support more than 1,000 jobs and have diverted nearly five million tons of material from landfills. The firm’s investment in Eureka includes $3 million from its partner American Beverage, a beverage industry trade association. The Recycling Partnership, a nonprofit launched by the Aluminum Association to promote curbside residential recycling, provided grant funding. Eureka is the partners’ fourth deal together.
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Dealflow overflow. Investment news crossing our desks:

  • Masdar, a state-owned energy company of the United Arab Emirates, raised $1 billion in a second green bond issuance to finance new renewable energy projects within the UAE and in several emerging markets. (Masdar)
  • Egyptian fintech company MNT-Halan raised $157.5 million from the International Finance Corp., Development Partners International and other investors to expand small business lending, consumer finance, embedded e-commerce finance and other financial services. (Disrupt Africa)
  • Spearmint Energy notched a $200 million credit facility with backing from Elda River Capital Management, Nuveen’s Energy Infrastructure Credit group and Aiga Capital Partners for development of a 4.1-gigawatt portfolio of battery storage projects in the US. (Spearmint Energy)

Impact Voices: Impact Tech

Giving first-generation college grads the (artificial) intelligence to launch their careers. Artificial intelligence is widely feared as a job killer. New York-based nonprofit Basta is using it to help first-generation college students get jobs. Basta’s Seekr survey guides job seekers with customized advice to optimize their chances of being hired. “When used strategically, the technology can be a game-changer, with the potential to drive economic mobility through richer and more customized career navigation,” writes Basta’s Maggie Raible in a guest post on ImpactAlpha. Basta received a $4 million gift from billionaire philanthropist Mackenzie Scott last month. Raible argues that organizations working with first-generation college students have a responsibility to harness artificial intelligence to the challenge of creating an equitable economy. “We need to use generative AI to categorically transform how first-gen students navigate the start of their careers.”

  • Building bridges. Workforce and edtech investors like Lumos Capital Group, JFF Ventures and Kapor Capital are spotting opportunities for AI to lower the cost of education, widen access to expertise, and provide other services for people facing barriers to career opportunities (for context see, “These VCs are betting on AI to upskill workers and expand pathways to good jobs”). Raible sees AI bridging career-building knowledge gaps such as the importance of sending a post-interview thank you note and writing a first draft. Simply explaining the basics of the tooI “is a good start,” says Raible. A step further: “Training a model to recognize the specific challenges first-gen students might encounter and provide feedback in affirming language.”
  • Keep reading, “Giving first-generation college grads the (artificial) intelligence to launch their careers,” by Basta’s Maggie Raible on ImpactAlpha. 

Agents of Impact: Follow the Talent

Darren Walker, president of the Ford Foundation, plans to step down at the end of 2025… LeapFrog Investments welcomes Ulrike Engling, previously with Visio Fund Management, as chief financial officer… Social Finance hires Harika Kolluri, formerly with Cowen and Company, as an impact investing associate… Impact Investors Foundation taps Africa-focused fund manager Kuramo Capital Management to manage its Nigerian Wholesale Impact Investment Fund, which invests in agriculture, clean energy, healthcare and education.

Roots of Impact seeks an impact-linked finance associate or senior associate in Frankfurt, Berlin or Cape Town… Triodos Bank is hiring a senior relationship investment manager in Brussels… Blue Owl Capital is looking for a principal or vice president of private funds accounting in New Jersey… Blue Forest has an opening for a controller. 

The New York City Economic Development Corp. is on the hunt for an operator to develop a climate innovation hub at the Brooklyn Army Terminal… Mexico-based venture capital firm Savia Ventures is hosting a discussion with Regeneration VC’s Katie Hoffman and Nodestar’s Elizabeth Sarquis on the role of women in addressing climate change, today at 12pm ET on LinkedIn. 

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– July 23, 2024